Message from the Chairman and CEO

FRL2017

Federico R. Lopez
EDC Chairman and CEO

For the Philippines, global warming is not some distant future event; it’s here, it’s now, and it’s affecting the very people and communities we love and serve.

 

Dear Stakeholders,

 

At last year’s Annual Shareholders Meetings, EDC and the other FPH Group companies pledged that we would no longer consider developing or investing in coal-fired power plants. When we made that decision to close the door to any of our companies putting up coal-fired power plants, it was not an easy one. Even today, we are the only large energy company in the country that has done so unequivocally.

 

Recently, we’ve been inundated by even more global evidence telling us that we have much less time to act than originally believed. Global warming is already wreaking havoc on the Earth’s water cycles and creating weather extremes like we’ve never seen before; and it is accelerating faster than previously imagined because of all the feedback loops being unleashed.

 

All sixteen years of the 21st century rank among the 17 warmest on record, and the five warmest years have all occurred since 2010 with 2014, 2015, and 2016 — in quick succession — having been the hottest years on historical record. According to the National Aeronautics and Space Administration (NASA), the combined Arctic and Antarctic sea ice numbers last February 13, 2017 were at their lowest point since satellites began to continuously measure them in 1979. Since that period we’ve, on average, “lost a chunk of sea ice larger than Mexico”!

 

Many experts believe we are now living in an era where we could see more than half the species on Earth wiped out before the end of the century. American journalist Elizabeth Kolbert expounds on this in her Pulitzer Prize-winning book, The Sixth Extinction: An Unnatural History. The last mass extinction occurred 65 million years ago as all the dinosaurs were wiped out during the Cretaceous period. Remember that this happened over thousands of years. What’s startling is, today we see it happening in just over a few decades!

 

Our country is ground zero for the calamitous effect of global warming. None of us will ever forget the aftermath of Typhoon Yolanda (Haiyan) and the immense suffering of communities who lost loved ones and whatever few possessions they had; and when we just think of the scale of rescue, relief, and rebuilding efforts that came after, those images cannot but have an enormous impact on how we move forward as a company. For the Philippines, global warming is not some distant future event; it’s here, it’s now, and it’s affecting the very people and communities we love and serve.

 

Today the world already stands 1.1 °C warmer than preindustrial times and the United Nations Environment Programme (UNEP) warns that we have three years left before the door closes to limiting temperature rise to 1.5 °C. In fact, most experts believe the COP21 agreements will not limit warming to only 2 °C but will likely get us to a 3- or even 4-degree warmer world.

 

The math is simple — global carbon emissions need to peak no later than 2020 and the world needs to be totally off carbon in 30 years or fewer if we are to keep within the 2 °C limit — which means cutting global emissions by half every decade henceforth. This is why the rush away from fossil fuels and toward renewables needs to accelerate; the world will need to deploy technology to utilize energy more efficiently in our buildings and homes; we will need to protect and enhance the trees and oceans that today still absorb half the world’s emissions; and we need to transform our food system from a major greenhouse gas emitter into one that’s at least GHG (greenhouse gas) neutral.

 

The bright side is that technology is moving along the right trajectory. We’re seeing exponential cost reductions for solar, wind, and battery storage; and over the last decade installations of renewable energy (RE) have been doubling roughly every 5 to 6 years. At this rate, RE will approach 100 percent by 2050. However, as more renewables penetrate our lives, this will have serious strategic implications for electric utilities and power generators, given its ability to change the shape of demand daily and yearly. Demand peaks will be shaved, grid electricity demand growth will be moderated, and energy production will be more democratized as more and more consumers simultaneously become producers of power. It’s a brave new world coming for the energy industry, with the looming threat of coal-fired power plants being stranded and incompatible with the need for dispatch flexibility and low carbon emissions.

 

Ironically, the Philippine electricity industry is a product of the 20th century and the tendency is to continue doing more of the same. But under the existing paradigm, many of our countrymen are still left out. There’s an estimated 11 million Filipinos still without electricity while many more suffer from unreliable and poor quality supply. The disparity only widens the gap between haves and have-nots, and the extremes caused by climate change and global warming will only make this gap worse. Paradoxically, however, we have the opportunity to build a power industry that leapfrogs into the 21st century and shouldn’t leave anyone behind.

 

EDC’s geothermal platform is a vital cog in a decarbonizing world that’s unfolding. Even today, it’s the only renewable energy technology capable of 24/7 baseload power at prices that already go head to head with fossil fuels. However, there’s much work yet to be done to get it future-ready, and we’re only just beginning; but to me, this is precisely what makes our work and your company, at this juncture of history, so exciting.